Bolt Maker Admits To Charges

Subsidiary To Pay $18 Million In Fines

May 13, 1990|By Los Angeles Daily News

In the largest case of its kind, operators of a manufacturer of aerospace fasteners have admitted to charges that they failed to properly test the parts for safety and agreed to pay $18 million in government fines and court costs.

Torrance, Calif.-based VSI Corp. and two former employees pleaded guilty Friday in U.S. District Court in Seattle to conspiracy and mail fraud in connection with shipping bolts that hadn't been properly tested or for which test results were falsified, U.S. Attorney Mike McKay said.

During a press conference in Seattle, McKay said the falsified reports covered millions of fasteners, including some bought for the B-2, B-1 and B-52 bombers, C-5B transport plane and F-18, F-15 and F-16 fighters.

James E. Ryan, VSI's former quality assurance manager, and Aram Marderian, former metallurgical laboratory supervisor, both of whom worked at VSI's Voi-Shan division in the Los Angeles suburb of Chatsworth, also pleaded guilty to conspiracy charges, McKay said.

Both men face up to five years in prison and up to $250,000 in fines, McKay said.

Federal agents initiated the investigation after three former Voi-Shan employees filed a $200 million suit against the company in May 1988 under the False Claims Act, which allows individuals to sue on behalf of the government and share in the proceeds of any settlement.

The settlement is believed to be the largest initiated under the act.

VSI vice president Donald Parker stressed that high-level company officials had no knowledge of the testing irregularities until federal agents conducted a three-day raid on the Chatsworth plant in early February 1989.

"The senior people in the company learned about the shortcuts in testing on Feb. 3, 1989," Parker said. "We have taken action with regard to everyone in a responsible position we feel was involved with it.

McKay said the investigation at VSI is continuing and could result in additional charges and penalties.

Hundreds of thousands of Voi-Shan bolts shipped to the government and commercial aircraft manufacturers were recalled during the investigation, McKay said.

Paul Hertog, 33, of Simi Valley; Tom Runion, 29; and a third, unnamed, former Voi-Shan worker will receive a minimum of $2.2 million of the $14.5 million in civil damages paid by the company, McKay said.

The company also agreed Friday to pay $3.5 million in damages, fines and costs of the investigation, he added.

Will Ramsey, a San Fernando Valley attorney representing Hertog and Runion, said he filed papers in Central District Court, Los Angeles, on Friday contesting the settlement as only about 10 percent of what government auditors had recommended.